Ametek
AME
$251.92
-0.00%
Ametek, Inc. is a diversified industrial manufacturer that owns more than 40 autonomous businesses organized into two operating groups: the Electronic Instruments Group (EIG), which sells analytical, test, and measurement instruments, and the Electromechanical Group (EMG), which produces highly engineered components, interconnects, and specialty metals for research, aerospace, energy, medical, and manufacturing end markets. The company's competitive identity rests on a disciplined niche-market strategy — it deliberately targets fragmented, high-margin businesses where it can establish product differentiation and market leadership, then compounds growth through a serial acquisition program that has absorbed dozens of brands since its 1930 founding. The current investor narrative centers on Ametek's return to double-digit organic growth, with Q2 2026 revenue rising 14.98% year-over-year to $2.04 billion and management raising the quarterly dividend by 10% in February 2026 — a signal of confidence in sustained cash generation. Debate among investors now hinges on whether Ametek's premium valuation (roughly 32x trailing earnings) is justified by its accelerating top line and fortress-like balance sheet, or whether the stock has run ahead of fundamentals after a 35% one-year gain.…
AME
Ametek
$251.92
Related headlines
Investment Opinion: Should I buy AME Today?
The synthesized recommendation is Hold, with a bias toward accumulating on weakness. The core thesis is that Ametek is a high-quality industrial compounder with accelerating growth and a fortress balance sheet, but the stock's premium valuation (31.98x trailing PE) and proximity to 52-week highs limit near-term upside. The analyst consensus rating of 'buy' (mean 1.75) and average target price of $280.00 imply 11.1% upside, which is modest relative to the risk of multiple compression if growth disappoints.
Supporting evidence for the Hold rating includes: 1) Revenue growth of 14.98% year-over-year in Q2 2026, a significant acceleration from 2.7% in Q1 2025; 2) Net margin of 19.9% and operating margin of 25.84%, both at the high end of the industrial sector; 3) Free cash flow of $1.825 billion TTM with a 93.4% conversion rate, funding both dividends and acquisitions; 4) Debt-to-equity of 0.221 and interest coverage of 17.5x, indicating minimal financial risk. However, the forward PE of 26.13x represents a 25–35% premium to peers, and the PEG ratio of 4.05 suggests the stock is expensive even after accounting for growth. The dividend yield of 0.60% is low, offering little income support.
The biggest risks that could invalidate the thesis are: 1) A deceleration in revenue growth below 10%, which would likely trigger multiple compression; 2) Margin compression from input cost inflation or unfavorable mix; 3) A broad industrial recession that reduces demand for Ametek's products. The rating would upgrade to Buy if the stock pulls back to the $220–$230 range (forward PE ~18–19x) or if revenue growth accelerates above 15% with margin expansion. It would downgrade to Sell if revenue growth falls below 8% or if operating margins contract below 24%. Relative to its history and peers, the stock appears overvalued, trading near the high end of its multi-year PE band (21.8x–34.0x) and at a premium to the sector. A more attractive entry point would be closer to the analyst low target of $217.00.
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AME 12-Month Price Forecast
Ametek presents a balanced risk/reward profile. The company's accelerating revenue growth, fortress balance sheet, and premium margins support a positive long-term outlook. However, the stock's valuation is stretched, trading near decade-high multiples and at 94.4% of its 52-week range, leaving little margin of safety. Analyst sentiment is constructive but not euphoric, with a consensus target implying modest upside. The base case (55% probability) assumes steady execution and a target range of $260–$280. I would upgrade to bullish if the stock pulls back to the $220–$230 range or if revenue growth accelerates above 15% with margin expansion. I would downgrade to bearish if revenue growth decelerates below 8% or if operating margins contract below 24%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Ametek's 12-month outlook, with a consensus price target around $280.28 and implied upside of +11.3% versus the current price.
Average Target
$280.28
0 analysts
Implied Upside
+11.3%
vs. current price
Analyst Count
—
covering this stock
Price Range
$217 - $318
Analyst target range
Coverage is robust, with 18 analysts following Ametek and a consensus recommendation of "buy" (mean rating of 1.75 on a scale where 1 is Strong Buy and 5 is Strong Sell). The average price target of $280.00 implies roughly 11.1% upside from the current price of $251.93, while the consensus forward EPS estimate of $12.03 and revenue estimate of $11.18 billion underpin that target. The distribution of recent ratings skews bullish: of the ten institutional actions logged since August 2026, seven are Buy/Outperform/Overweight (TD Cowen, Truist, BNP Paribas, RBC, BMO, DA Davidson, Keybanc) and three are Neutral (Citigroup, Baird, and one other), with no sell ratings — a constructive but not euphoric sentiment profile.
The target range spans $217.00 to $318.00, a spread of $101 or roughly 40% of the current price, which signals meaningful disagreement about the growth trajectory. The high target of $318.00 implies about 26% upside and likely assumes continued double-digit revenue growth, further margin expansion toward 27%+ operating margins, and successful deployment of acquisition capital at accretive multiples. The low target of $217.00 implies roughly 14% downside and appears to price in a growth slowdown, margin compression from mix or cost inflation, or a broader industrial recession. Notably, the low target sits below the current price, meaning at least one analyst sees the stock as overvalued after its 35% one-year run. The clustering of reiterated (rather than upgraded) ratings in August 2026 — BNP Paribas, TD Cowen, Truist, RBC, BMO, DA Davidson, Citigroup, Keybanc, and Baird all maintained prior stances — suggests analysts are in a holding pattern awaiting evidence that the Q2 growth acceleration is durable before raising targets further.
Bulls vs Bears: AME Investment Factors
The bull case currently has stronger evidence, anchored by accelerating revenue growth (14.98% YoY in Q2 2026), a fortress balance sheet (debt-to-equity of 0.221), and premium margins (19.9% net margin). However, the bear case is not without merit: the stock trades near decade-high valuation multiples (31.98x trailing PE) and at 94.4% of its 52-week range, leaving little margin of safety. The single most important tension is whether the Q2 growth acceleration is durable enough to justify the premium multiple. If Ametek can sustain double-digit organic growth and continue expanding margins, the stock can grow into its valuation; if growth decelerates, the multiple is vulnerable to compression. Analyst sentiment is constructive but not euphoric, with a consensus target of $280 implying modest 11.1% upside, suggesting the market is in a 'show me' phase awaiting further evidence.
Bullish
- Revenue growth accelerating sharply: Q2 2026 revenue rose 14.98% year-over-year to $2.044 billion, a dramatic acceleration from the roughly 2.7% growth in Q1 2025. The sequential climb from $1.732 billion in Q1 2025 to $2.044 billion in Q2 2026 demonstrates a clear upward trajectory. This re-acceleration supports the thesis that Ametek has moved past the industrial slowdown that pressured 2025 results.
- Fortress balance sheet with minimal leverage: Debt-to-equity stands at just 0.221 and interest coverage is a robust 17.5x on Q2 2026 interest expense of $30.1 million. The company generated $451.7 million in free cash flow in Q2 2026 alone, with a 93.4% FCF conversion rate from operating cash flow. This financial strength funds both bolt-on acquisitions ($214.9 million in Q2 2026) and shareholder returns ($77.9 million in dividends) entirely from internal cash generation.
- Premium margins reflect niche strategy: Q2 2026 net margin was 19.9% and operating margin 25.84%, both at the high end of the diversified industrial sector. Gross margin has been stable in a tight 35.8%–37.2% band over the past five quarters, demonstrating pricing power and mix stability. These margins validate Ametek's deliberate strategy of owning differentiated, high-margin franchises rather than commodity manufacturing assets.
- Strong analyst consensus with upside: 18 analysts cover Ametek with a consensus 'buy' rating (mean 1.75) and an average price target of $280.00, implying 11.1% upside from the current $251.93. The distribution of recent ratings skews bullish: seven of ten institutional actions since August 2026 are Buy/Outperform/Overweight, with no sell ratings. The high target of $318.00 implies 26% upside.
Bearish
- Valuation near decade highs: The trailing PE of 31.98x is close to the decade-high of 34.0x seen in Q2 2026, and the forward PE of 26.13x represents a 25–35% premium to the typical electrical equipment peer group. The PEG ratio of 4.05 suggests the stock is expensive even after accounting for growth. Price-to-sales of 6.39x and EV/EBITDA of 21.37x are also rich, leaving little room for execution missteps.
- Limited margin of safety near 52-week high: At $251.93, the stock trades at approximately 94.4% of its 52-week range, just 3.7% below the 52-week high of $261.16. This positioning means buyers at current levels are paying up for a business that has already been re-rated by the market. Any earnings disappointment could trigger a sharp mean-reversion move.
- Analyst target dispersion signals uncertainty: The target range spans $217.00 to $318.00, a spread of $101 or roughly 40% of the current price, indicating meaningful disagreement about the growth trajectory. The low target of $217.00 implies 14% downside and sits below the current price, meaning at least one analyst sees the stock as overvalued after its 35% one-year run.
- Growth-dependent valuation leaves no room for error: The 18% gap between trailing PE (31.98x) and forward PE (26.13x) implies the market expects meaningful earnings growth over the next twelve months. Consensus EPS estimates of $12.03 for the forward period must be met or exceeded to justify the current multiple. Any deceleration in revenue growth or margin compression would likely compress the multiple.
AME Technical Analysis
Ametek is in a sustained uptrend, with the stock up 35.35% over the past year and 20.46% year-to-date, closing at $251.93 on October 2, 2026. That price sits at approximately 94.4% of the 52-week range, calculated as ($251.93 - $179.24) / ($261.16 - $179.24), placing the shares just below their 52-week high of $261.16 and far above the 52-week low of $179.24. This positioning signals strong momentum but also limited margin of safety — the stock is trading near the top of its annual band, meaning buyers at current levels are paying up for a business that has already been re-rated by the market. The 13.7% maximum drawdown over the period shows the stock has experienced only shallow pullbacks, consistent with institutional accumulation rather than speculative churn.
Short-term momentum is accelerating and, importantly, is outpacing the broader market. The stock gained 8.04% over the past month versus the S&P 500's 0.59%, producing a relative strength of +7.45 percentage points, and added 7.38% over three months against the index's 3.34% (relative strength +4.04). The one-month gain of 8.04% is actually stronger than the three-month gain of 7.38%, indicating that momentum has re-accelerated in recent weeks rather than decelerating — a bullish divergence from the longer-term trend. However, the six-month relative strength of -1.94% versus SPY's 17.35% gain reveals that Ametek lagged the market during the spring, meaning the current rally represents a reassertion of leadership after a period of consolidation. Volume of roughly 1.59 million shares and a short ratio of 2.09 suggest no crowded short positioning that could fuel a squeeze, but also no excessive speculative froth.
Key technical levels are well defined: support rests at the 52-week low of $179.24, roughly 28.8% below the current price, while resistance sits at the 52-week high of $261.16, about 3.7% above. A breakout above $261.16 would confirm the uptrend and likely invite momentum-driven flows, whereas a breakdown below the $240 area (the August consolidation zone) would be an early warning of trend exhaustion, with a deeper failure toward $179.24 representing a full trend reversal. The stock's beta of 0.989 means it moves roughly in line with the market — slightly less volatile than SPY — which is unusually defensive for an industrial and supports position sizing at or modestly above market-weight levels. Combined with the 13.7% max drawdown, the risk profile is that of a high-quality compounder rather than a high-beta cyclical, though the proximity to 52-week highs means any earnings disappointment could trigger a sharp mean-reversion move.
Beta
0.96
0.96x market volatility
Max Drawdown
-13.7%
Largest decline past year
52-Week Range
$179-$261
Price range past year
Annual Return
+37.1%
Cumulative gain past year
| Period | AME Return | S&P 500 |
|---|---|---|
| 1m | +6.0% | +0.6% |
| 3m | +8.7% | +3.6% |
| 6m | +9.3% | +14.6% |
| 1y | +37.1% | +15.8% |
| ytd | +20.5% | +13.6% |
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AME Fundamental Analysis
Ametek's revenue trajectory is clearly re-accelerating. Q2 2026 revenue reached $2.044 billion, up 14.98% year-over-year from $1.778 billion in Q2 2025, and up sequentially from $1.928 billion in Q1 2026. The multi-quarter trend is constructive: revenue climbed from $1.732 billion in Q1 2025 to $1.893 billion in Q3 2025, $1.998 billion in Q4 2025, $1.928 billion in Q1 2026, and $2.044 billion in Q2 2026, with the year-over-year growth rate accelerating from roughly 2.7% in Q1 2025 to nearly 15% in Q2 2026. Segment data shows the Electronic Instruments Group generated $1.321 billion and the Electromechanical Group $723 million in the most recent period, with EIG representing about 64.6% of revenue — the instruments business is the larger and likely higher-margin growth engine. This acceleration, if sustained, supports the bull case that Ametek is past the industrial slowdown that pressured 2025 results.
Profitability is robust and stable at high levels. Q2 2026 net income was $406.9 million on $2.044 billion of revenue, a net margin of 19.9%, while gross margin came in at 35.95% and operating margin at 25.84%. Gross margin has hovered in a tight 35.8%–37.2% band over the past five quarters (Q2 2025: 35.76%, Q1 2026: 37.21%, Q2 2026: 35.95%), demonstrating pricing power and mix stability despite input cost pressures. Net income has grown steadily from $358.4 million in Q2 2025 to $406.9 million in Q2 2026, a 13.5% increase, and the net margin of 19.9% is consistent with the 19.6%–20.7% range seen across recent quarters. For a diversified industrial with heavy exposure to niche instrumentation, these margins are at the high end of the sector and reflect Ametek's deliberate strategy of owning differentiated, high-margin franchises rather than commodity manufacturing assets.
The balance sheet and cash flow profile are exceptionally strong. Debt-to-equity stands at just 0.221, and the debt ratio of 0.139 means liabilities are modest relative to assets; interest coverage of 17.5x on Q2 2026 interest expense of $30.1 million provides ample cushion. Free cash flow is substantial — $451.7 million in Q2 2026 alone and $1.825 billion on a trailing-twelve-month basis — against operating cash flow of $483.7 million in the quarter, a 93.4% FCF conversion rate. ROE of 13.93% and ROA of 8.16% are healthy for an industrial, and the current ratio of 1.06 indicates adequate short-term liquidity. The company returned capital aggressively in Q2 2026, paying $77.9 million in dividends and deploying $214.9 million on acquisitions, while still growing cash to $495.4 million — evidence that Ametek funds both its bolt-on M&A strategy and shareholder returns entirely from internal cash generation, with no reliance on external financing.
Quarterly Revenue
$2.0B
2026-06
Revenue YoY Growth
+15.0%
YoY Comparison
Gross Margin
35.9%
Latest Quarter
Free Cash Flow
$1.8B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is AME Overvalued?
Because Ametek is solidly profitable — Q2 2026 net income of $406.9 million and trailing EPS positive — the PE ratio is the appropriate primary valuation metric. The stock trades at a trailing PE of 31.98x and a forward PE of 26.13x, with the roughly 18% gap between the two implying the market expects meaningful earnings growth over the next twelve months. That expectation is corroborated by consensus EPS estimates of $12.03 for the forward period versus the current run-rate, and the PEG ratio of 4.05 suggests that even after accounting for growth, the shares are not cheap on a growth-adjusted basis.
Relative to the broader industrial sector, Ametek commands a clear premium. Its trailing PE of 31.98x and forward PE of 26.13x sit well above the typical electrical equipment and multi-industry peer group, which generally trades in the high-teens to low-20s forward earnings range; the forward multiple represents roughly a 25–35% premium to that peer average. The premium is partially justified by Ametek's superior margin profile — 19.9% net margin and 25.8% operating margin — and its consistent FCF generation, but the EV/EBITDA of 21.37x and price-to-sales of 6.39x are also rich, and the price-to-free-cash-flow ratio of 26.26x leaves little room for execution missteps. On a price-to-book basis at 4.45x, the stock reflects the market's willingness to pay up for a high-return, asset-light-ish industrial compounder.
Historically, Ametek's valuation sits near the upper end of its own multi-year band. The trailing PE has ranged from roughly 21.8x (Q3 2022) to 34.0x (Q2 2026), and the current 31.98x reading is close to that decade-high, while the price-to-sales ratio of 6.39x compares to a historical range of roughly 16.7x–27.1x on the quarterly data (noting the historical series uses a different share-count basis). The price-to-book of 4.45x is modestly above the 3.6x–4.9x range seen since 2021, and the EV/EBITDA of 21.37x is above the 60x–91x enterprise-value-multiple series on the historical data. The takeaway is that the market is pricing in optimistic expectations — sustained double-digit growth and continued margin expansion — meaning the stock is vulnerable to any deceleration, but the premium is anchored by genuinely improving fundamentals rather than pure multiple speculation.
PE
32.0x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 25x~31x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
21.4x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are relatively contained given Ametek's strong balance sheet, but not negligible. Debt-to-equity of 0.221 and interest coverage of 17.5x provide ample cushion, yet the company's serial acquisition strategy introduces integration risk and potential for overpaying for assets. Free cash flow of $1.825 billion on a trailing-twelve-month basis is robust, but the 93.4% FCF conversion rate means there is little slack if operating cash flow dips. Revenue concentration is moderate: the Electronic Instruments Group represents about 64.6% of revenue, so a downturn in analytical instruments or a key end-market like aerospace could disproportionately impact results. Additionally, the company's growth-by-acquisition model requires a steady pipeline of targets at reasonable prices; a shortage of attractive deals or rising acquisition multiples could slow growth.
Market and competitive risks center on valuation compression and cyclical exposure. At 31.98x trailing earnings and 26.13x forward earnings, Ametek trades at a 25–35% premium to its peer group, leaving it vulnerable to multiple contraction if growth slows or if interest rates remain elevated. The stock's beta of 0.989 means it moves roughly in line with the market, but as an industrial, it is still exposed to macroeconomic cycles that could reduce demand for its instruments and electromechanical components. Competitive threats exist in niche markets, though Ametek's strategy of targeting fragmented, high-margin businesses provides some insulation. Recent news of a 10% dividend increase in February 2026 signals confidence, but also raises the bar for future cash generation. Sector rotation away from industrials, especially if investors favor more defensive or higher-growth sectors, could pressure the stock.
The worst-case scenario would involve a combination of a broad industrial recession, a slowdown in key end-markets like aerospace and medical, and multiple compression. In this scenario, the stock could retest its 52-week low of $179.24, representing a 28.8% decline from the current price of $251.93. The analyst low target of $217.00 implies a 13.9% downside, but a more severe downturn could push shares below that level. Historically, the stock has experienced a maximum drawdown of 13.7% over the past year, but in a recessionary environment, drawdowns could be deeper. Investors could lose approximately 29% from current levels in this adverse scenario, with the downside potentially extending to $170–$180 if earnings estimates are revised downward.
FAQ
The key risks include: 1) Valuation risk: trading at 31.98x trailing earnings, a premium to peers, leaves the stock vulnerable to multiple compression if growth slows. 2) Cyclical risk: as an industrial, Ametek is exposed to macroeconomic downturns that could reduce demand for its instruments and components. 3) Integration risk: the company's growth-by-acquisition strategy carries the risk of overpaying or failing to integrate targets effectively. 4) Margin risk: input cost inflation or unfavorable mix could pressure the 19.9% net margin. The most severe risk is a combination of an industrial recession and multiple compression, which could push the stock down to the 52-week low of $179.24, a 28.8% decline.
Our 12-month forecast has three scenarios: Bull case (25% probability) targets $300–$318, assuming sustained double-digit growth and margin expansion. Base case (55% probability) targets $260–$280, assuming steady execution in line with consensus EPS of $12.03. Bear case (20% probability) targets $217–$230, assuming a growth slowdown and multiple compression. The base case is most likely, with the key assumption that revenue growth moderates to 8–10% but remains healthy, and operating margins hold around 26%. The analyst average target of $280 aligns with our base case.
AME appears overvalued relative to its own history and peers. The trailing PE of 31.98x is near the decade-high of 34.0x, and the forward PE of 26.13x represents a 25–35% premium to the typical electrical equipment peer group. The PEG ratio of 4.05 suggests the stock is expensive even after accounting for growth. Price-to-sales of 6.39x and EV/EBITDA of 21.37x are also rich. The market is pricing in optimistic expectations for sustained double-digit growth and margin expansion. While the premium is anchored by genuinely improving fundamentals, any deceleration could trigger multiple compression.
Ametek is a high-quality industrial with accelerating revenue growth (14.98% YoY in Q2 2026), a fortress balance sheet (debt-to-equity of 0.221), and premium margins (19.9% net margin). However, the stock trades at a premium valuation (31.98x trailing PE) and near its 52-week high, leaving limited margin of safety. Analyst consensus target of $280 implies 11.1% upside, which is modest relative to the risk of multiple compression. For long-term investors comfortable with a Hold rating and willing to accumulate on pullbacks, AME is a solid core holding. For those seeking immediate upside, waiting for a better entry point near $220–$230 would be prudent.
AME is best suited for long-term investment. Its beta of 0.989 indicates market-like volatility, but the stock's consistent free cash flow generation, growing dividend (10% increase in February 2026), and disciplined acquisition strategy make it a classic compounder. Short-term trading is less attractive given the stock's proximity to 52-week highs and modest analyst upside. Earnings visibility is good, with 18 analysts covering and a consensus 'buy' rating. We recommend a minimum holding period of 2–3 years to allow the company's growth initiatives and acquisitions to bear fruit. Investors should monitor quarterly revenue growth and margin trends to ensure the thesis remains intact.